Stock Analysis
AppLovin Corporation (APP)
NASDAQ: APP · Digital Advertising / Adtech
Updated
Rated Watchlist, with a fair value of $453 against a last close of $272.28 (+66.4% implied upside). Watchlist holds: the $266.84 low was retested on 13 October and held, five broker target cuts in a week added no new facts, and fair value stays at $453 ahead of the 4 November report.
- Verdict
- Watchlist
- Fair Value
- $453
- Investment Score
- 74.4/100prev 74.4
Technical read (chart only): Confirms as of Below the falling 50-day and the 200-day average with MACD negative; the $266.84 low held a retest on 13 October. Watch for a close back above $300, which now also clears the 20-day average, then a higher low above $266.84.The Watchlist verdict comes from the fundamentals alone. The technical read looks only at the price chart. It does not change the verdict or the score and only guides entry timing.
Investment Scorecard
Composite score 74.4/100 (previous 74.4). Every factor is scored out of 10, ten always being the best outcome, including for risk.
| Factor | Score | Weight | Change | Basis |
|---|---|---|---|---|
| Business Quality | 8/10 | 16% | unchanged | Nothing disclosed changes an 88.5% gross margin and a 66% free cash flow margin. |
| Financial Strength | 9/10 | 16% | unchanged | Net debt near zero against earnings; buyback capacity in place at 30 June. |
| Competitive Advantage | 7/10 | 16% | unchanged | The Unity dispute is in arbitration with no new ruling; no reported loss of share. |
| Management | 7/10 | 10% | unchanged | No insider sales since 21 August; the August guidance miss still weighs on the record. |
| Growth Potential | 7/10 | 16% | unchanged | No new evidence on model uplift or e-commerce adoption until 4 November. |
| Valuation | 8/10 | 16% | unchanged | 16.3x this year's consensus EPS; fair value $453, 66% above the price. |
| Risk (10 = lowest risk) | 5/10 | 10% | unchanged | Several legal fronts and a binary November print; no solvency issue. |
Recent Developments
| Date | Development | Impact |
|---|---|---|
| Third-quarter results date Set by the company on 7 October: results on 4 November 2026 after the US close, webinar at 5:00pm ET. Revenue guide $2.055bn to $2.085bn (management). Reading: The first hard evidence on model uplift since the August miss; the event the rating waits on. | High | |
| San Diego County suit over children's data Filed in San Diego Superior Court. Alleges bypassed parental controls and opt-outs, device fingerprinting of children and adult-themed ads in child-rated apps. No penalty amount published; no update in the period. Reading: Penalties would be small; the risk that matters is a remedy limiting data collection, which cannot be sized yet. | Medium | |
| Legal action against Unity over the Ad Quality SDK Restraining order denied on 2 October; arbitration under way, sealing hearing reported for 23 October. No new ruling. Reading: Little earnings effect while it runs; Unity's data collection continues. | Medium | |
| Securities class action Complaint in N.D. Cal. covering 12 February to 5 August 2026; lead-plaintiff deadline 16 November 2026; further law-firm notices on 13 October, no new allegations. Reading: Grown in number of firms, not in substance. | Medium |
Key Risks
| Risk | Probability | Severity | Comment |
|---|---|---|---|
| High volatility into the print | High | High | ATR near 5% of price; the $266.84 low has held one retest. |
| Model-release cadence remains unobservable | Medium | High | Untested until the third-quarter report on 4 November. |
| E-commerce adoption slower than the case assumes | Medium-High | Medium | The bull case needs consumer near a fifth of revenue. |
| Competitive share in game advertising | Medium | Medium | Unity's data collection continues while arbitration runs. |
| Discount-rate sensitivity | Medium | Medium | The ten-year closed at 5.21% on 13 October with a further hike still discussed; a sustained rise would cut the base multiple. |
| Litigation and regulation on several fronts | Medium | Medium | County suit, securities class action, Unity arbitration and a Dutch privacy action; the risk is a remedy limiting data collection. |
Scenario Analysis
| Case | Probability | Fair Value | Outlook |
|---|---|---|---|
| Bull | 20% | $700 | FY2027 revenue $11.0bn, adjusted EPS $25.00. Model cadence normalises and consumer reaches a fifth of revenue. 28x. Unchanged. |
| Base | 50% | $483 | FY2027 revenue $10.4bn, adjusted EPS $21.00. Third-quarter guide met, growth near 28%; no e-commerce turn needed before 2027. 23x. Unchanged. |
| Bear | 30% | $238 | FY2027 revenue $9.2bn, adjusted EPS $17.00. Model uplift fades, gaming saturates, consumer stalls. 14x. Unchanged. |
The Case
Would an investor buy AppLovin at $272.28? Not yet. The shares trade at 16.3x this year's earnings with a strong balance sheet, but they are in a downtrend and the question behind the August fall, whether model improvements keep coming, is answered on 4 November. The October low held a retest and five broker target cuts added no new facts, so fair value stays at $453. A close back above $300, or a third-quarter report that meets the guide with uplift resuming, restores the Buy.
Archived Reports
Beating The Bull keeps every past version of this report on file. Verdicts and numbers reflect what was known when each one was published.
| Published | Verdict | Type | Report |
|---|---|---|---|
| Watchlist | Scheduled Refresh | View PDF | |
| Watchlist | Scheduled Refresh | View PDF | |
| Watchlist | Scheduled Refresh | View PDF | |
| Watchlist | Scheduled Refresh | View PDF | |
| Watchlist | Scheduled Refresh | View PDF | |
| Buy | Scheduled Refresh | View PDF | |
| Buy | Scheduled Refresh | View PDF | |
| Buy | Scheduled Refresh | View PDF | |
| Buy | Scheduled Refresh | View PDF | |
| Buy | Initial Coverage | View PDF |
Informational use only. Not financial advice.